Brussels, 21/05/2001 (Agence Europe) - The European Commission is expected to adopt a Communication on Tuesday on strengthening fiscal coordination within the European Union. Taxation Commissioner Frits Bolkestein takes the same approach in his proposal as was outlined in a note to Commissioners in February in which he comments that the harmonisation of the EU Member States' direct taxation regimes is not necessary.
Mr Bolkestein believes that a level of competition between Member States is beneficial, whether in terms of the taxation of individuals or of companies. He recently argued that competition can be healthy and can oblige governments to offer the best service at the lowest cost, when speaking to a group of American businessmen. Probably looking for a half-way house between harmonisation and complete disparity, the Commissioner called for greater coordination between Member States insofar as differences in taxation can have a direct effect on the single market. He focussed attention on, for example, taxation systems for non-residents designed to attract highly qualified expats. Similarly, he recommended hat indirect taxation be harmonised if it risks forming an immediate obstacle to the circulation of goods and services. The draft Communication notes that a significant level of harmonisation already exists in terms of indirect taxation with respect to VAT, green taxes, excise duty on mineral oils, extending taxation to cover other sources of energy (gas, coal and electricity) and duties levied on tobacco and alcohol. Without prejudice to the way that Member States will react to Frits Bolkestein's proposal, the liberal tone of the proposed reforms sparked off a debate that has spread outside the confines of the Commission itself (see EUROPE of 8 February, p. 8).